The number of publicly reported provider-payor disputes has nearly tripled in just two years. I’ve written before about why that’s happening and why it matters. Thankfully, health systems are more willing to explain their side of the story when contract negotiations break down, and that’s a healthy development. If providers don’t explain how healthcare economics actually work, someone else will gladly do it for them. No one likes a vacuum and with no narrative, someone else, likely a payor, will create one.
But we’re not here to talk about public contract disputes.
Two American Hospital Association amicus briefs landed in my inbox within a few weeks of each other. Spending your days in managed care negotiations tends to make you notice these things. Still, two briefs so close together caught my attention because most public contract disputes never get anywhere near a courtroom. They go public when negotiations fail. Lawsuits are different, and these briefs made me consider how the nature of provider-payor conflict is changing.
For years, provider-payor conflict was largely understood as a disagreement over reimbursement rates and contract terms. Increasingly, many of the disputes reaching the courts seem to involve something else entirely. They involve the business policies that determine how claims are reviewed, repriced (whether for site of service or something else), audited, downcoded, or ultimately paid below what was negotiated and agreed to.
Why provider-payor disputes are shifting from rates to language and policies
If you asked ten people what might cause a health system to sue a company as huge as UnitedHealthcare, most would probably come up with roughly the same answers. Not paying claims. Refusing to honor a contract. Disputes over reimbursement rates. Something obvious.
Few non-health system people would answer “level-of-severity review methodology” or “claim repricing program” or “emergency department reimbursement policy.” Yet those are exactly the kinds of subjects appearing in many of the provider-payor cases making their way through the courts today.
Some of these cases involve broad reimbursement methodologies that affect large numbers of claims. Others focus on policies that may touch only a small portion of a provider’s business but could be detrimental to a patient’s health.
On the surface, they may look technical or administrative. In reality, they’re about money. They’re about whether payors can implement policies that change how reimbursement is determined after a contract has been agreed to and care has already been delivered.
That’s what makes these lawsuits so important for healthcare providers to pay attention to.
Payors have a handful of go-to strategies for keeping healthcare costs low. They can negotiate lower reimbursement rates when the contract comes up for renewal — and don’t get me started on the growing gap between reimbursement and the actual cost of delivering care. They can attempt to reduce utilization through prior authorization and other medical management programs which end in denials. Or they can implement policies, methodologies, reviews, and administrative processes that ultimately reduce what gets paid under an existing reimbursement framework.
They appear one at a time, often wrapped in language about payment accuracy, reimbursement integrity, or cost control. Each may reduce reimbursement by an amount that doesn’t seem worth a legal fight, a public battle, or months of management attention.
The issue is the cumulative effect. Most recently, when we evaluated four language changes to combat three new payor policies over the last three years, the total impact was five percentage points to the contract. For example, a repricing methodology is layered on top of a review process, which sits alongside an audit program. That audit program operates within a broader reimbursement framework that may be changing in other ways as well. Any one of those changes may not be worth fighting on its own. Taken together, they can have a meaningful impact on reimbursement, cash flow, staffing, and administrative costs.
When fighting becomes a budget decision
If these policies can have such a significant cumulative impact, a reasonable question follows. Why don’t providers challenge all of them?
The answer has more to do with economics than whether a provider agrees with the policy.
One of the more remarkable aspects of the modern healthcare system is that some of the largest companies in the world (insurance companies) — and yes, the world — repeatedly present themselves as the underdog or victim in disputes with organizations that have a fraction of their resources.
UnitedHealth Group generated nearly $448 billion in revenue in 2025. CVS Health generated more than $402 billion. Elevance Health generated nearly $198 billion. Put differently, these are organizations operating at a scale that would have been almost unimaginable a generation ago.
Meanwhile, hospitals and health systems are trying to recruit physicians, replace aging equipment, defend themselves against cyberattacks, modernize technology, and somehow maintain enough financial stability to keep doing all of those things next year.
That doesn’t mean providers are powerless, but every fight comes with an opportunity cost. A policy may create administrative burden, reduce reimbursement, or both. Challenging it requires resources of its own, and every dollar devoted to a reimbursement dispute is a dollar that can’t be spent somewhere else.
That’s what makes the cumulative effect so important, and so insidious. Providers are already managing reviews, methodologies, edits, appeals, and reimbursement processes when the next policy appears. It simply becomes the next item on a growing list.
Viewed individually, many of these decisions seem rational. Viewed collectively, they create a different outcome. Policies that may never have survived a direct reimbursement negotiation become part of the operating environment simply because fighting each one carries its own cost. And then fighting each policy at each payor, well that means more staff and follow-up.
When a policy sounds more reasonable than it is
One of the reasons these policies are so difficult to challenge is that they often arrive wrapped in narratives that sound perfectly reasonable.
Site-neutral payments are a good example. On the surface, the concept sounds almost self-evident. Why should the same service cost more simply because it was performed in one setting rather than another?
If that’s the standard, I’m looking forward to my view of the Seine in Paris, France, at Paris, Texas prices.
The argument doesn’t even hold up particularly well outside healthcare. A loaf of bread doesn’t cost the same in Buffalo as it does in Manhattan. The same gallon of milk costs different amounts in different parts of the country as well. And let’s be very clear, grocery stores can be two blocks from one another and have very different prices for most items. Most consumers never think much about those differences because they rarely shop for groceries across multiple markets.
Yet when the discussion turns to healthcare, we’re suddenly expected to believe that location, infrastructure, staffing, regulatory requirements, emergency preparedness, and standby capacity should have little or no impact on price. So if an MRI starts costing exactly the same at a freestanding clinic as it does at a hospital, get ready for the hospital services that can’t be done elsewhere to triple in price. Hospitals still have to stay open 24 hours a day and provide care to everyone who walks through the ER.
The challenge for providers is that these arguments are difficult to refute in a soundbite.
The cost of accepting a new normal
Nobody wakes up one morning and decides to accept a fundamentally different reimbursement environment. That’s exactly why these policies show up one at a time.
They’re annoying, sometimes expensive, and almost always administratively burdensome. But each one gets absorbed, and that’s how the system changes. Years later, the reimbursement environment looks very different than it did before.
Looking back, it’s easy to see the cumulative effect. Living through it feels more like choosing your battles. Which is why we should be paying attention to these lawsuits.
At some point, accepting the next policy becomes more expensive than fighting it. So we ask the same questions we always do
- What is your plan?
- How will you execute it?
- Does it include educating the everyday person on why they should care?
